The European Commission is taking further steps to support the development of the European hydrogen market by launching work on a pilot mechanism. The new mechanism was created under the recently adopted decarbonised gases and hydrogen package and aims to accelerate investments by providing a clearer picture of the market situation of both off-takers and suppliers and facilitating contacts between them. It will be in place for five years and will be part of the European Hydrogen Bank.
“Hydrogen is a strategic part of the EU’s clean energy transition,” sad Maroš Šefčovič, Executive Vice-President for European Green Deal, Interinstitutional Relations and Foresight. “It is vital not only for hitting our net-zero targets but also for maintaining our competitiveness and preserving Europe’s position as a leading global economic power. By facilitating the matchmaking between suppliers and consumers, we will contribute decisively to accelerating the development of Europe’s nascent hydrogen sector. At the same time, we continue taking ambitious steps towards exploiting to the fullest Europe’s political and economic weight through the joint purchase of strategic resources.”
“This new mechanism will play a critical role in kick-starting a functioning European hydrogen market,” added Kadri Simson, Commissioner for Energy. “There are still too few projects moving towards final investment decisions, and too few off-takers signing contracts to switch to hydrogen. This mechanism will help us better understand and identify where hydrogen demand and supply are emerging. The information that will be available will help us create bridges between European off-takers and hydrogen suppliers both within and outside the EU, preparing the ground for future auctions under the European Hydrogen Bank. It will also allow us to guide the planning and development of the necessary transport infrastructure through Projects of Common European Interest and its funding through the EU Connecting Europe Facility for Energy.”
The hydrogen pilot mechanism will collect, process and give access to information on demand and supply for renewable, low-carbon hydrogen and derivatives, allowing European off-takers to match with both European and foreign suppliers. It will collect and process market data on the development of hydrogen flows and prices. A procurement process has started today to find a service provider to develop an IT platform to operate the pilot mechanism. The Commission plans to sign a contract by the end of this year so that it can start its operations by mid-2025.
In Europe, the first large-scale electrolysers are already under construction and the first off-take agreements have been signed. Improving demand visibility between suppliers and consumers will help accelerate final investment decisions in Europe and contribute to securing off-take agreements. Hydrogen will play an important role in achieving our Green Deal targets, phasing out Russian fossil fuels, and supporting the decarbonisation and competitiveness of European industry.
The pilot hydrogen mechanism forms part of the Commission’s ongoing work to establish a European Multiproduct Platform for the joint purchase of strategic commodities, which, in the future, could cover commodities such as strategic raw materials.